Berkshire Loses AAA Rating

Insurance Networking News, February 5, 2010

Bill Kenealy

Omaha, Neb.-based Berkshire Hathaway Inc., whose insurance holdings include GEICO and General Re Corp., had its long-term credit rating lowered one notch from “AAA’’ to “AA’’ by Standard & Poor’s.

S&P cited liquidity issues raised by the company’s recent $26.3 billion purchase of the Fort Worth-based Burlington Northern Santa Fe Corp. as reason for the downgrade.

"The rating actions are based on our view that Berkshire's overall capital adequacy, as well as that of its insurance operations, has weakened to levels no longer consistent with a 'AAA' rating and is not expected to return to extremely strong levels in the near term," Standard & Poor's credit analyst John Iten said in a statement. "Furthermore, we expect that the consolidated liquidity position of BRK will be reduced from extremely strong historical levels as a result of the acquisition."

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